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WASHINGTON — Ruling in a closely watched intellectual property case, the Supreme Court gave both sides something to celebrate in disputes involving alleged consumer confusion over trademarks. The court’s unanimous ruling in KP Permanent Make-Up Inc. v. Lasting Impression I Inc. said that the law tolerates “a certain degree of confusion on the part of consumers,” a view favoring alleged trademark infringers. But it also gave trademark holders a partial victory when it said that evidence of likely consumer confusion is relevant and can be introduced by trademark holders in suing infringers. The issue is especially important in disputes over generic or store-brand product names and in cases where competitors claim that a trademark holder has unfairly monopolized a descriptive or common word or term. “We win because we can have evidence of actual confusion and can go back to lower courts and use it,” said Beth Brinkmann of Morrison & Foerster in D.C., who represented Lasting Impression in its defense of its 1993 trademark of the word “microcolor” to describe its permanent makeup products. KP, a competitor in the permanent makeup business — a form of tattooing — also used the term, and when the two companies fought it out in court, a judge in the U.S. District Court for the Central District of California ruled that KP had used the term descriptively and in good faith, amounting to a “fair use” under the Lanham Act. The Ninth Circuit U.S. Court of Appeals reversed, finding that no fair use was possible when there is a possibility of consumer confusion. The appeals court also indicated it was KP’s burden to prove that its use of Lasting Impression’s trademarked term would not produce confusion. With other appeals courts split on the issues, the court took up the case and heard arguments in October. Justice David Souter, writing for the court, said that since “the burden of proving likelihood of confusion rests with the [trademark holder], and the fair use defendant has no free-standing need to show confusion unlikely, it follows (contrary to the Court of Appeals’ view) that some possibility of consumer confusion must be compatible with fair use.” Souter stopped sort of saying how much confusion is tolerable, but did say that trademark holders are entitled to offer evidence on the issue. The court vacated the Ninth Circuit ruling and remanded it, with instructions to look at specific factual issues disputed by the parties in the case. “It’s a middle-road decision,” says Michael Boudett of Foley Hoag in Boston, who filed a brief in the case on behalf of the American Intellectual Property Law Association. The association urged a position similar to how the court ruled. “While the existence of some confusion should not completely bar the fair use defense, the courts should consider it.” Boudett says one message conveyed by the court is that businesses which trademark descriptive or generic names such as “bestcameras.com” do so at their own risk, because competitors can use similar names even if some consumer confusion results. Wednesday’s ruling is consistent with the court’s recent trademark jurisprudence, Boudett adds. “The last spate of rulings have been against the trademark holder. They do not seem open to broadening the trademark right.” Tony Mauro is the U.S. Supreme Court correspondent for Legal Times, a Recorder affiliate based in Washington, D.C.

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